Calculate equilibrium level of real gross domestic product

Assignment Help Macroeconomics

Reference no: EM131966932

Assignment

Question 1

a) Illustrate demand-pull and cost-push inflation using the AD-AS model for the short-run period.
b) Assuming real GDP is initially below the full-employment level, which type of inflation is worse in your opinion [justify your opinion].

Question 2

Complete the following table.

Year (January)	Working age population (millions persons)	Labour force (millions persons)	Employed (millions persons)	Unemployed (millions persons)	Participation rate (%)	Unemployment rate (%)
2015	19,169,000		11,642,000	770,000
2016		12,671,000	11,938,000		65.13%
2017	19,763,000	12,789,000		738,000		5.77%
2018	20,082,000				65.56%	5.47%

Question 3

Let's say the economy has fallen into a recession and the inflation rate falls to zero percent.

a) What open market operations is the Reserve Bank of Australia likely to engage in?
b) Why is the interest elasticity of investment important to the Reserve Bank's decision regarding interest rates?

Question 4

According to the Keynesian model of the economy, aggregate expenditure is the key determinant of the equilibrium level of real GDP.

Y = C + I + G + X - M
C = C0 + cX (Y - T)

Symbols	Meaning	Value
Y	Real gross domestic product
C	Consumption expenditure
C₀	Autonomous component of consumption expenditure	$500 billion
c	Marginal propensity to consume	0.8
T	Taxes imposed	$250 billion
I	Planned investment expenditure	$50 billion
G	Government expenditure	$300 billion
X	Export expenditure	$30 billion
M	Import expenditure	$35 billion

a) Calculate the income-expenditure multiplier.

b) Calculate the equilibrium level of real gross domestic product.

c) If planned investment expenditure increased from $50 billion to $60 billion (ceteris paribus), calculate the economic growthrate.

d) In the above model, what simplifying assumptions have been made about the tax paid and the spending on imports?

Reference no: EM131966932

Questions Cloud

Describe any information that may help alliance reduce costs : Describe any information that may help Alliance reduce costs while providing better service. Propose a new approach that could be used by Alliance.

Draw conclusions because the p-value is too large : A company would like to test the claim that more than 2% of parts are defective, 20 randomly selected parts were chosen and 3 were defective

List your personal growth objectives anticipated : Analysis of inclusive education in the academic performance of students with special needs: Advantages and disadvantages.

Difference between the percent of females who teach : A University would like to see if there is a significant difference between the percent of females who teach in the art department and the percent

Calculate equilibrium level of real gross domestic product : Calculate the equilibrium level of real gross domestic product. What open market operations is the Reserve Bank of Australia likely to engage in?

Determine the accounts receivable turnover : Question - Accounts Receivable Analysis - Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables

Exploring a major expansion to a national competitor : Write one-page summary on why it is best to have an in-house systems. Make the best case for this option without any reference to the outsourcing option

Difference between the direct and the indirect methods : Describe the difference between the direct and the indirect methods of preparing the operating section of the statement of cash flows.

Test used to analyze data : The resulting data will include 40 scores for the medicine and 40 scores for the placebo for each person. They type of test used to analyze this data would be:

User Account

All Pages